SEP 2 800E6

74 Pages·2007·6.67 MB·English

ADVERTISING IN COMPUTER GAMES
by
Ilya Vedrashko
B.A. Business Administration, American University in Bulgaria, 2000
Submitted to the Department of Comparative Media Studies in partial fulfillment of the
requirements for the degree of Master of Science in Comparative Media Studies at the
Massachusetts Institute of Technology
September 2006
Signature of author ..... ..... ....v..../ . .. ............ ...........................................
Dept. o omparative Media Studies, August 11, 2006
K,.; 'f r\
Certified by .............. ......-- "-. ,., "'........................'..i" .Wi "..'".r 'hc .
Prof. William Uricchio
Accepted by................... . . ...... :.... ..................... .. ................
Prof. William Uricchio
© 2006 Ilya Vedrashko. All rights reserved.
The author hereby grants to MIT permission to reproduce and distribute publicly paper and electronic
copies of this thesis document in whole or in part in any medium now known or hereafter created.
MASSACHUSETTS INS .
OF TECHNOLOG E
SEP 28 00E6
ARCHIVES
TLIBRARIES
ADVERTISING IN COMPUTER GAMES
by
Ilya Vedrashko
Submitted to the Department of Comparative Media Studies in partial fulfillment of the
requirements for the degree of Master of Science in Comparative Media Studies at the
Massachusetts Institute of Technology
Abstract
This paper suggests advertisers should experiment with in-game advertising to gain skills
that could become vital in the near future. It compiles, arranges and analyzes the existing
body of academic and industry knowledge on advertising and product placement in
computer game environments. The medium's characteristics are compared to other
channels' in terms of their attractiveness to marketers, and the business environment is
analyzed to offer recommendations on the relative advantages of in-game advertising.
The paper also contains a brief historical review of in-game advertising, and descriptions of
currently available and emerging advertising formats.
Keywords
Advertising, marketing, branding, product placement, branded entertainment, networks,
computer games, video games, virtual worlds.
Thesis supervisors
* Prof. Henry Jenkins
* Prof. William Uricchio
Acknowledgments
This work would not have been possible without:
* MIT C3 Convergence Culture Consortium and its corporate partners GSD&M,
MTV Networks, and Turner Broadcasting System that supported the initial probe of
the subject.
* Darren Herman at IGA Worldwide, Jonathan Epstein at Double Fusion, and the
entire team at Massive Incorporated who were very forthcoming with information
about their businesses. I owe special thanks to David Sturman at Massive for a very
thorough and informative walk-through of the company's operations.
* Readers of the thesis blog and my friends in the virtual worlds who volunteered
priceless bits of knowledge and whose insightful comments would often reveal
unexpected dimensions.
* Sarah Wolozin and Generoso Fierro at the Comparative Media Studies department
at MIT who made sure this thesis would one day happen.
* The Comparative Media Studies department that invited me to MIT and made it
feel like home.
* Prof. Henry Jenkins and Prof. William Uricchio who encouraged and steered this
work from its early days all the way to the defense.
* Mom and dad who have been rooting for me from day one even though they are
still not quite sure what it is that I do. See? Computer games are good for
something.
Thank you.
Summary
Today, as advertisers grow increasingly unhappy with the value delivered by traditional
media, they turn to alternative communication channels. Marketers, many of whom for a
long time have been discounting computer games as an activity reserved for teenage boys
with unattractively little purchasing power, are now gathering for conferences trying to
figure out how to get into the game, so to speak.
While still relegated to the fringes of marketing budgets (games' share in the overall
advertising spending remained at meager 0.1%1), in-game advertising and advergaming is
slated to grow to a $1B business by 2009. Over the past few years, at least a dozen
companies have sprung to claim their slice of this advertising pie, their services ranging
from dynamic insertion of standard ad units to customized product placement tailored to
advertisers' needs.
As the interest in the medium's potential grows, gamners become wary. On forums, they
protest against advertising intrusion into what they see as their last haven safe from the
marketing onslaught. Current advertising practices do little to placate their fears and to
suggest that games won't become the next victim of advertising excesses, even though
industry professionals are careful to note how important it is for the game-based ads to be
unobtrusive. One reason for these misfiring efforts is the systemic deficiency of the
advertising process; the market is better equipped to process mass-produced and recycled
communications than custom-tailored messages. The other reason is a lack of experience in
planning for an idiosyncratic medium that has only recently emerged from its relative
obscurity and reluctantly opened its doors to brands.
This paper is designed to address the latter problem by compiling, arranging and analyzing
the existing body of academic and industry knowledge to distill a set of recommendations
and ideas for advertising in computer games -- a series of cheats and walkthroughs, in the
gamers' parlance. The main question this work seeks to answer is how to design and place
in-game advertising in a way that would recognize and respect the limitations of the
medium while taking advantage of the unique opportunities it offers.
INTRODUCTION
"Alice opened the door andf ound that it led into a small passage,n ot much larger than a
rat-hole: she knelt down and looked along the passage into the loveliest garden you ever
saw.
Lewis Carroll,A lice's Adventures in Wonderland
5
The War
Hey, fellow advertiser. Yes, you, red-eyed, with horn-rimmed glasses and a black
turtleneck. Can you pitch a product to a god when even mortals go out of their way to
avoid us.
The remote control, that sword of consumer Damocles, has been hanging over our
collective head for over half a century now. When the Lazy Bones first appeared in the
1950s, the technology was advertised (what an irony) as an ad silencer. What did we do?
We set up road blocks by scooping up chunks of air time across all channels to keep the
suffers bumping into our commercials they were so diligently trying to dodge.
The ultimate ad-skipping technologies - the refrigerator, the microwave and the bathroom
- have invited a similarly ungraceful backlash. We are single-handedly responsible for one
of the largest and potentially most dangerous urban phenomena, the Super Flush, the
massive splash of advertising dollars going down the drain when all Super Bowl fans head
to the bathroom during commercial breaks. Our response? Turning the volume up and
slinging the ads within earshot of our flushing and corn-popping audience.
As the remote control mutates and proliferates, our countermeasures follow a predictable
path of making the ads louder, more intrusive and more omnipresent. The success of these
measures has been predictably low and has resulted in more anger than brand loyalty on the
part of the same audience we are clumsily trying to court.
Advertisers are frustrated because their forecasts show that the situation is not about to
improve; the first random study that popped up on Google predicts that DVR adoption will
grow at 47 percent a year through 20082. Most of the current research points out that
anywhere between 70 and 80 percent of DVR owners skip commercials. What are we
going to do about it? Slap banners right in the middle of the screen when TiVo goes into its
fast-forward mode, that's what.
When AT&T in 1994 launched its first banner on HotWired, it was exotic, exciting and
effective. The interest quickly faded, and we rushed to gussy it up with pretty colors and
animations. That was fun for a while, but then people turned away and got back to their
business. We upped the ante once again, and came up with even, we thought, more exciting
technologies -- exit windows, interstitials, roll-ons, roll-ups, pop-ups, pop-unders, pop-all-
over-the-place. The very TV spots people were trying to zap on TV, we began to stream
online. We turned the volume up, too, embarrassing office surfers who scrambled for the
"mute" button and deafening everyone wearing headphones.
We were the only ones excited. People responded in kind. First, they would politely click
on the "x" button to get rid of the mini windows jumping in their faces. Then they created a
pop-up blocker. Then the pop-up blocker became a standard feature in all browsers. Then
they learned how to block animations. When that didn't help, they began to block off entire
ad servers. Now they've come up with Grease Monkey, a technology that automatically
scraps every single ad from a web page before it is even loaded.
The war is on and we are losing it. And this is one war we don't even need to be fighting.
We love our audience, but it is only our fault if no one can tell. Instead of being a gentle
and loyal lover, a prince charming always ready to help, never a nuisance, we collectively
act like a paranoid stalker, obsessively collecting and fetishizing every little thing our
audience leaves behind. We call our audience at nights, breathe heavily into the phone and
read a sloppily written script. We deluge their mail boxes with letters. We jealously guard
our audience's every move; god forbid that the audience should ever turn away from us.
We demand undivided attention. Like an insecure teenager, we shout obscenities,
mistaking disdain for interest. In an act of desperation, we parade naked bodies. We burp,
fart, and insult our audience's intelligence. We doubt their sexual endurance and we are
never satisfied with their breast size. We criticize the cars they drive, the clothes they were,
their cooking, parental and gardening skills. We scoff at their education, habits and tastes.
Even our pick-up lines are so clich6 out that a simple "may I buy you a drink" would sound
excitingly fresh.
What do you call people who pay for someone's entertainment and then demand certain
favors in return? Advertisers.
We generally mean well, though, and sometimes people even love us back. On those
bright days, they laugh at our jokes, answer our calls, forward our emails, and buy our
stuff. They say they never watch ads on TV, but cheer the reruns of the old ones. They say
they hate ads in newspapers but diligently cut out coupons. They say they can't stand ads
on the DVDs they buy, but rewind movie trailers. They pay for glamor magazines that are
90 percent ads. They keep their Yellow Pages tomes nearby. They collect fridge magnets.
They wear our logos. They tattoo our names on their skin. They are saying how they
despise advertisers, yet Boston's section of Craig's List hosts some 150,000 ads they
themselves post in any given month. Then Google launched its AdSense and suddenly
they are reading self-help books on how to boost click-throughs.
We love them. They, it turns out, are not ruling us out of their lives either. Why can't we
do the right thing and fix this relationship from dysfunctional into thriving? Sometimes we
don't know what the right thing would be. Sometimes we do, but the system won't let us
do what's right.
The first part is easy. All we really need to know we already learned in the kindergarten.
Play fair. Don't hit people. Look. Listen. Follow the path of the least resistance. Be on
time. We would be better off even if we followed our own slogans. Think different. Be
inspired. Be yourself for a while. Try harder. Just do it. Some advertising gurus say the
business of advertising should not be confused with the business of entertainment. They
were proven wrong by the millions who downloaded BMW films and then headed to
dealerships to test-drive the car. Others say dry info doesn't sell. They were proven wrong
by the spectacular rise of Google, a company whose entire business is to mediate the sales
of dry ads, 95 characters at a time. The whole stack of books of advertising wisdom can be
summed up in one sentence: "Whatever you have to say, say it to the people who are
interested and say it when it suits them best in a way that will keep them listening."
We are also prisoners of the media system we ourselves helped to set up. It all started quite
innocently:
Consider broadcasting. In its infancy, it was a reflexive instrument, a tool
for selling radio sets. But broadcasting's real birth might more accurately be
dated to the Postum Co.'s 1926 order that its Philadelphia advertising
agency, Young & Rubicam, relocate to New York, the developing center of
the broadcast-network business, to handle the account of its Jell-O division.
Within eight years, that move bequeathed to the listening public "The Jack
Benny Program," "Colgate House Party," "General Foods Cooking School"
and a smattering of other audience-delighting radio programs.3
The very medium that we hoped would bring us closer to the people has grown into a risk-
averse behemoth that is cute to look at but is harder to teach new tricks than the proverbial
old dog. The 30-second spot everyone is so willing to see dead that it just might as well die
is not around because it does the job well - it is considered bad manners now to claim so in
public. It is around because there is nothing to replace it, that is, nothing convenient and
comfortably familiar.
People at Worldwide Wrestling Entertainment are among the few who are trying something
unfamiliar and uncomfortable. In October 2005, WWE began extending its live coverage
to the web instead of cutting it off for commercial breaks. At least one analyst, a director of
national broadcast for Initiative, immediately voiced a concern: "Now you're talking about
telling the most rabid of fans to switch to another platform when advertisers are wanting to
talk to them. It sets a dangerous precedent."4
Dangerous precedent? WWE may have just dealt a Hulk Hogan blow to ad skipping,
single-handedly incapacitating the Super Flush, the DVR and the remote. Chris Chambers,
WWE's VP for interactive media, quoted a house study that showed 60 percent of the
simultaneous TV and computer viewers not channel-surfing away during the commercial
breaks. "If they weren't online, they'd probably go get a snack or go the bathroom. This
way they're probably still in the same room and can hear the ads."5
Instead of exploring the opportunities the DVR offers, we are trying to circumvent or break
the fast-forwarding function. The DVR threatens the familiar and the comfortable. The
DVR is bad. If we can't kill the DVR, then we must at least cripple it.
Prohibitive transaction costs, technological limitations, red tape, shortage of research
knowledge, insufficient infrastructure, broken communications, conflicting interests, or
plain inertia both on our and media's side have perpetuated the tyranny of the existing
delivery formats, even if these formats have been stretched to the breaking point.
Pop-up ads annoy consumers and freeze their computers and yet more money is poured
into pop-ups. Spam renders entire email accounts useless and yet a computer maker keeps
sending me offers to buy a PC even though I have already bought one from them and have
not expressed any interest in buying more. Nearly identical credit card offers from
competing banks fill up mailboxes. It is a vicious circle: the more cluttered the format, the
more advertising is crammed in it. If there is a law of diminishing returns, it doesn't seem
anyone in advertising is aware.
The New World
We, the advertisers, have permeated every imaginable space, collectively showering our
fellow citizens with 3,000 daily offers, promises, offers of promises and promises of offers,
enticements, seductions, solicitations, invitations, demands, recommendations and thinly
disguised threats. That's 187.5 every waking hour, 3.1 a minute.
We have taken over every part of our fellow citizens' lives. Our ads greet them at home
and they accompany them to work; our ads are on TV, magazines, newspapers, radio,
clothes, street signs, cars, buses, computer monitors, toys, cloth hangers, subways, stores,
food items, bathroom stalls, telephones, trash receptacles, parking meters, bills, ATMs,
money, desks, flip-flops, soda cans, pizza boxes, coffee mugs, mirrors, tables, and
homeless people. We have painted the sky and branded the beach sand.
We have almost run out of space.
Have you ever dreamt about working back at the time when life was simple, Bernbach,
Bernays and Ogilvy were yet to be born, television was still a matter of science fiction and
the information space was more like a stately ball room than a chaotic floor of a stock
exchange? Would you, who complain about today's media clutter by night and create more
of it by day, would you jump into conversations, interrupt family dinners, sneak into
bedrooms, knock on doors, spray-paint walls, feign romance and send unwanted letters like
there's no tomorrow?
What would have you done differently? Because you are standing at the door that is about
to swing open to reveal sprawling cities, endless highways, virgin forests and other
undeveloped property so utterly devoid of anything branded that it is hard on the eyes, and
the choice of what to make of it is now yours.
It is a strange world. It is a world where people kill without hate, die without pain, re-
spawn and die again, hijack cars, operate spaceships, beat up perfect strangers, command
lemmings, lunch on orcs, befriend elves, and nonchalantly save the universe one planet at a
time. Armed to their teeth, they wield flaming swords and laser blasters. They carry gold
coins and gems, and always pay cash.
It's the world of computer games, the promised land of virtual reality where the wildest
dreams come true that for the 30 years of its existence has remained largely impregnable to
us. And if we are finally about to be ushered in, we'd better know the rules of the place
where natives' revenge can be swift and spectacular. If you are already afraid of a remote
control, think of what an unleashed swarm of fire-spewing dragons can do to your precious
billboard.
Remember how I asked you whether you could pitch a product to a god? That's what this
world is all about. We will be pitching to gods.
DEFINITIONS AND SCOPE
10